UPDATE 1-Peru finmin says will not reverse recent excise tax hikes

2 Min Read

(Adds quote from minister on taxes, comments on fiscal deficit)

LIMA, June 14 (Reuters) - Peru’s new finance minister, Carlos Oliva, said on Thursday that the government would not reverse recent hikes to excise taxes on diesel and other products deemed bad for public health, despite scattered protests in recent weeks.

Oliva took office last week after his predecessor resigned amid a public uproar over the tax hikes, leading many to expect that the government was planning to lower them again.

But Oliva used his first news conference to make clear the government of President Martin Vizcarra would not reverse its decision.

“There’s no going back,” Oliva said twice during the news conference when journalists asked about the tax rates. “It’s a proposal from the Finance Ministry that is supported by the president and the prime minister, and we’re going to continue.”

Oliva noted that consumers should soon start to see fuel costs come down in Peru following global oil prices’ move lower in recent weeks.

“That’s going to ripple favorably through our economy,” he added.

The higher excise taxes on diesel, cigarettes, soft drinks and other products were implemented under the previous finance minister just as crude prices were rising - prompting protests led by truck and bus drivers in southern Peru.

Oliva said the government still plans to reduce the fiscal deficit to 1 percent of gross domestic product (GDP) by 2021, and said the deficit would likely end 2018 above 3 percent of GDP as previously forecast.

“The fiscal problem has been and still is one of the economy’s weaknesses,” Oliva said.

But economic growth is recovering from last year’s sharp slowdown and likely accelerated to 7 percent year-on-year in April, Oliva said.

GDP data for April is scheduled for publication on Friday. (Reporting by Marco Aquino, writing by Mitra Taj, editing by G Crosse)